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Real Money With Ali Velshi

The impact of jobs, housing, healthcare, education and savings on the economy.



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Philadelphia 14, Comcast 5, America 4, Us 4, David Shuster 2, The City 2, Pew 1, Netflix 1, Underemployed 1, Scc 1, At&t 1, Jay Stein 1, Patricia Sobka 1, Larry Icall 1, Larry Ickle 1, Obama 1, Kevin 1, Richard Gisberg 1, Chrysler 1, Microsoft 1,
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  Al Jazeera America    Real Money With Ali Velshi    The impact of jobs, housing,  
   healthcare, education and savings on the economy.  

    March 1, 2014
    7:00 - 7:31pm EST  

flooding. >> >> they are some of america's most pressing problems - crumbling bridges, substandard airports and outdated rail roads. we'll tell you how to fix the infrastructure, and how to pay for it. we are taking the pulse of the housing market recovery ahead of the season. plus, confessions of a middle class cab driver trying to get back on the road to economic stability.
i'm david shuster, filling in for ali velshi, and this is "real money". >> in is "real money," and you are the most important part of the show. join our live conversation for the next half hour at: d plus, that's our grade - i'm talking about our roads, bridges, rail roads, ports, bridges. they get nothing better than a d plus grade on an infrastructure report card put out by the american society of engineers. not only are we doing enough not to nod erpize our -- modernise our infrastructure, we are barely maintaining what we have now. we were once held up to the rest of the world, now we are falling behind. our airports are third world after seeing the hong kong airport. no one bothered to tell him we
don't say third world. president obama wants to do something about it and proposed $302 billion plan that he hopes congress will adopt to modernize roads, businesses, and transit systems. federal funding is being squeezed. the highway trust fund, getting $35 billion from federal tax and gasoline could run out of money because it's not enough to meet the roads and maintenance needs. congress needs to fund before september. but congress probably won't let it through. we say that because the president got nowhere when he tried something more ambitious in 2011, establishing a national infrastructure bank leveraging private investment to fund works across the county in transportation, water and energy. with an infrastructure bank they would solicit money from the private sector and guarantee
loans, it's a joint public private model used by many, smacking of socialism to republicans in congress. america continues to suffer because of a lack of leadership on the issue. the concept of that national infrastructure bank is not new, but proposals to create one are gauging traction among lawmakers. we are spoke to the think tank focussed on public policy, asking why is it a good idea to turn the idea into reality. >> we have invested for too long in infrastructure, and as a result we see tension between the need to expand the system to meet increased demand, growing population, trade. governors and state departments face a paradox of needing to invest in the old system to ensure it's in a state of good repair and making critical new investments to grow the economy and provide opportunities for the citizens. >> i guess the issue is if you
don't have the money to start with you are not maintenance, you can't get your head around the new stuff. i guess the al-qaeda any is if you don't have the money to fix your roof and you get a boiler, you don't think about building an extension. >> that's the case. a national infrastructure has to be part of a xrepsive national strategy. as you mentioned the highway trust fund capitalized by gas on 18.5 cents a gallon will run dry, putting a halt to thousands of projects during the summer construction season, putting people out of works. the gas tax that capitalizes the fund was raised in 1993. in that time it lost purchasing power and is equivalent to 11.5 cents. to put them in perspective, jurassic part was the number wug movie in america. gas was $1.05, and the european
union was being created. it's been a long time since raising the tax. you would thing, i would think that maintenance of infrastructure, and the building of new infrastructure crosses party lines, there's something for everybody. why do we not have bipartisan support, why do people not want to support that. we have a bad taste in our mouth about government spending and how the stimulus was executed. >> it's part of it, it's tough to go to the public and ask for more money. people drive every day, taking public transportation, the system worked well. sometimes some of the sky is falling rhetoric of people that care about infrastructure and understand the role in our economy, sometimes it appears as though there's a gap. my come ute was bad, not terrible. >> i wish we'd get away from the sky is falling. i get it every time it snows we shouldn't have power outages,
that's a problem, they need to be fixed and put under ground. but why not high speed rail and the best broadband like south korea has. why not these cutting edge global things. why do we deal with infrastructure on a sky is falling as opposed to this could be the best country in the world. >> republicans for a number of years attacked the federal government, undermining people's confidence in the ability to deliver on big grand ideas. it's hard to have a conversation when one of the two parties is trying to convince people of the inept attitude of the government. it's tough to have the conversation. >> kevin good. good to talk to you. >> strong but slowing down, it's a simply but accurate way to describe the recovery of thest housing market. >> let's start with new home
sales. no one expected sales to jump 9.6% from december to january. the home price index rose 13.4%, the largest gain since 2005. so that is the strong part. here is the slowing down part. home prices declined a 10th of one per cent. housing prices dropped. home sales and price growth are expected to soften this year. the reasons include a decline in home affordability, because rates are a percentage point above where they were. rising prices made homes too expensive for some potential buyers. ali spoke for chris mayor, and asked if a larger slow down is ahead. listen. >> we are starting to see
effective interest rates coming up. when they go up people get off the fence saying, "oh, my god, got to get into the market", we saw it in the second half of the year, we are starting to see the effect of that show up in terms of people having less enthusiasm to jump in the market. >> despite it's 4.5% for a fixed mortgage, that will be one of the lowest rates we see in our lifetime. >> there's no question you have to - make we hit lower levels nine months ago, but basically for your and my lifetime that we remember, you are going back, you know, 30-40 years to see times before the 1970s, and 1950s and '60s, where the interest rates were anywhere near the level. >> you look at a 30% increase in homes, do you see another year of that? we get into worrisome territory. is that sustainable? >> i am not worried about the
price levels. if house prices fall 50%, they are increasing off a low base. some of the numbers are driven by a low base and house prices - nationally they collapsed. i'm not worried that they are at upsustainable levels. what worries me is the lack of household formation, the fact that there's a lot of people at home. you are not seeing first-time buyers coming into the market, and it's that that is sort of concerning to me more necessarily than the head line numbers. >> play it out for my viewer. why is household formation important. >> it's important because it's people getting on with their lives and economy. when people buy homes, they spent money on other things, it stimulates the economy and those household formations drive construction, and even though the home constructions are up from where they are, were before, they are nowhere near the level that would get us back to normal population growth,
which would be, you know, a million and a quarter to a million and a half a year. that's what we would think of as a normal market. we are nowhere near the levels. >> ultimately this is connected to the same things we are concerned about with respect to the middle class, jobs and income. >> yes, i worry that if we lose the impact of home ownership in the economy. we'll have a cohort of people who are going to be unprepared, worse than the numbers seem to suggest, because people don't count housing and savings. people hit requirement and having got the nest egg built up it will be worse. >> thank you for joining us, chris mayor, a professor at the school. >> eagles, rocky balboa, but what it is not any more, middle class. not like it used to be. we explain. he's underemployed. the new york city cab driver
trying to get off the road and back to his career. >> there are certain issues that i'm dealing with, namely lack of discretionary income. i stopped saving. in other words my life is not on cruise control. those stories and more as real money continues.
>> philadelphia is a perfect
example of the decline of the middle class. the city of brotherly love is known as solidly and power fully middle class blue-collar town. back before the first rocky film was made, it was that. 59% of the city's residence were middle class. by 2010 it dropped to 42%. that's according to the pew charitable trust. philadelphia is a poorer city than when it was the manufacturing powerhouse. it lost a larger share of the tax paying middle class residents. america starts to split along haves and have not. philadelphia is not benefitting from the trend. it has not seen an increase in the upper class the same way the rest of the nation has. that can only mean one thing, between 1970 and 2010 the share of lower class grew from 30% of
the population to 47% making it the single biggest part of the population, the least able to support the cost of running the city. the study says most of the haloing out of the middle class occurred before the year 2000 and before the great recession. ali dug deeper into the report with larry icall the project director for pew's philadelphia program. listen. >> one of the fascinating things we found was in 1970, 44% of people we considered middle class did not have a high school degree because there were the blue collar jobs available. that's not the case now. you need a college degree or a lot of college education to be considered part of the middle class. it's true nationally and in philadelphia. >> i've been talking to people about this all day. they say, "tell me why? why did it happen? what happened to philadelphia? why was it hit harder to other cities that you
looked at?" what is the april to that. >> it was certainly hit hard. whether it was harder than other cities is hard to say. philadelphia was a heavily manufacturing town. when those jobs disappeared it tack a hard hit and maybe a little longer than other cities figure out what the next step is. now it's dependent on education and the medical sector and that is working better for the city. >> is the geography of philadelphia - does it work against it? a lot of wealthy people say they are from philadelph philadelphia, but they live in the collar counties, the wealthy counties where the property tax doesn't go to the city of philadelphia. >> that's part of the issue. one of the things that was fascinating to us is when we did the analysis and compared to other cities, a snapshot in
2010, we found the size of the middle class in philadelphia, was not different to a lot of other cities. what was different was the size of the upper income group. in philadelphia, it was 9-10% in places like washington, boston, new york, it's 15, 16, 17%. that's a big difference. as you say in those cities, some of those people, a lot of those people are living within the city limits. that's less true in philadelphia. are there obvious solutions for a place like philadelphia? >> there are - the solutions may be obvious, but they are certainly not easy. you know, in our report we talk about three kinds of solutions. one is to kate tor the middle class -- cator to the middle -- cater to the middle class, those that might want to come. you do it by tax breaks, education call option, life sti
amenities. the second way it to grow the middle class from below, through education, job training, workforce development. the third way, and maybe the simplest, and maybe the difficult as well is to take care of the urban basics. a city where it's jobs, public safety - they are the main concerns of the middle class and concerns of everyone else. >> if those things were in place in a better way in philadelphia, you have a larger chance of maintaining the middle class. if you have education and it's a safe city, you have a better chance of attracting a middle class residence. >> that's right, and the good news is the population has been growing. we've had an influx of young adults giving the city a lot of energy and giving it an
opportunity to change the dynamics. >> good to talk to you. larry ickle is the project director at the pew charitable trust. a promise for this show is to understand what is happening to the middle class. it's shrinking. more disturbing, people are slipping out of the middle class quickly. a third of americans raised in the middle class dropped down the economic ladder as adults. the number one cause, unemployment. ali got into a cab with a new york city kab driver, but not by choice. jay had a job in the online industry, but when his job went under he decided to make a living driving a cab. >> you have been doing this for seven, eight months. >> yes >> how do you feel? >> if you ask if i like it, i don't. it's difficult work for a lot
of hours for very little money. i was earning $125,000 plus, plus, plus commission, expenses. now i'm earning maybe i'll earn $60,000 gross. it's a 12 hour day hustle. >> how long do you think you'll do this? >> hopefully today is my last day. >> you are working hard to get something else? >> absolutely. when somebody wants to meet with me i make myself available and go off duty an hour before the interview, get to a parking lot. throw the cab into a parking lot. go up to the interview, after the interview is over, get back into the cab, and go back to work. >> did anyone ask if you felt you were part of the middle class? >> not recently. >> were you before the job? >> i consider myself to be middle class, yes. >> and you still do. >> i do, but there are issues
that i'm dealing with, namely lack of discretionary income. i stopped saving. in other words, my life is not on cruise control. to me that's the definition of middle class. you can save, think forward, think some time in the future, emergencies come up, you can take care of them. other than the bills getting paid, i have no opportunity to enjoy what life has to of, and if there's an emergency, which account do i raid to pay for that emergency. >> you sound like a guy who understands the american dream, has a piece of it, has a setback and wants to get back on the road to achieving it. what is the roadmap to you. ? >> i'll pay a cab to pay the bills. i didn't go to college to drive a cab. i'm optimistic about the future. wr in one of the wealthy cities. if i can't figure out how to
access some of that wealth. shame on me. >> jay stein is optimistic about the future it's not easy to recover after a big slip. he went from making $125,000 a year to $60,000 gross. long-term unemployment def states the middle class and it's not as easy to bounce back. it takes 41 weeks for someone to find a job. a tough reality which is why we are impressed with jay's attitude and certainly. that's why we decided to highlight not just his story, but the story of the middle class. >> next up - digital video and the need for speed. the deal for netflix and comcast. the house surfing "house of cards" for consumers. that story and more as "real money"
>> the media world was abuzz after comcast announced an interconnect agreement with netflix, giving them direct connection to comcast broadband network, promising to give
23 million customers faster streaming, including "house of cards," and a whole host of dramas streamed over the web. they'll pay for the direct connection, but it's not clear how much. to ensure faster streaming customers like comcast want to cut out the content distribution providers, cdp, and do business with comcast. verizon is in talks with netflix as well. broadband providers could charge more to pump content into your home, with consumers paying more for it. it's not clear if netflix is paying nor it comcast than it pays to middlemen to rout the traffic. the internet neutrality is under threat. to understand what we are talking about patricia sobka has this report.
>> can you cut me some slack >> now that netflix has access to comaft broadband pipes, customers fans of shows like "orange is the new black", can look forward to faster streaming. >> advocates of a free and open internet are worried consumers could be on the wrong end of the deal. [ singing ] . >> i find in the end the con assume are pays, if netflix takes on additional cost, we find their hands reaching into our wallet. >> higher bills could be the beginning. last month a federal circuit court struck the scc's net neutrality rules to force broadband to treat all internet traffic the same. much like a public highway is open to all, net neutrality ensured the infrastructure used to deliver content, including the last mile pipes owned by
comcast, verizon and at&t would be open to providers and consumers. supporters of net neutrality argued that allowing providers to join with video streamers will limit consumer choice and possibly undermine internet freedom. >> the beauty of the open internet is you can innovate without permission. the deal suggests it's harder to do that. >> opponents argue that priority access over broadband generates revenue to upgrade networks, creating a better experience for end users, accustomed to watching shows like "house of cards" at the push of a button. >> we learned last week the top pick from the car critics of consumer reports and this car doesn't use gas at all. the battery powered tesla luxury
sedan is the first vehicle rated best overall by the magazine. it was rated best pick-up. that's the first time a chrysler grab top honours. lexus is the top brand by consumer reports. ford and jeep sit at the bottom of the rankings. ford did well in road tests, but reliability was hurt by an infotainment system. ford is dumping the microsoft system for one using technology. >> kab driver is optimistic about the future. we are not sure he should be, it's not easy to recover after a slip. at best are the folks that lose a quarter of income after a decade, a third of them had not regained their footing. for baby boomers, it's difficult the closer he gets to
retirement. people are scared of this very thing happening to them. jay's definition of middle class is to not have to worry about money and enjoy what life has to offer. that's a valid definition, because the american dream is not just about money, it's about security and peace of mind. that's why we decided to highlight not just jay's story, it. that's our show for today, i'm david shuster in for ali velshi. thanks as always for joining us.
hello, i'm richard gisberg, and you are at "the listening poet." ukraine gets a domestic government. the